Correlation Between Mount Gibson and Australia
Can any of the company-specific risk be diversified away by investing in both Mount Gibson and Australia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mount Gibson and Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Australia and New, you can compare the effects of market volatilities on Mount Gibson and Australia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mount Gibson with a short position of Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Australia.
Diversification Opportunities for Mount Gibson and Australia
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mount and Australia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New and Mount Gibson is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mount Gibson Iron are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Mount Gibson i.e., Mount Gibson and Australia go up and down completely randomly.
Pair Corralation between Mount Gibson and Australia
Assuming the 90 days trading horizon Mount Gibson Iron is expected to under-perform the Australia. In addition to that, Mount Gibson is 1.63 times more volatile than Australia and New. It trades about -0.24 of its total potential returns per unit of risk. Australia and New is currently generating about -0.01 per unit of volatility. If you would invest 2,948 in Australia and New on October 11, 2024 and sell it today you would lose (11.00) from holding Australia and New or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. Australia and New
Performance |
| Timeline |
| Mount Gibson Iron |
| Australia and New |
Mount Gibson and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Australia
The main advantage of trading using opposite Mount Gibson and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson position performs unexpectedly, Australia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Australia will offset losses from the drop in Australia's long position.| Mount Gibson vs. Sayona Mining | Mount Gibson vs. Globe Metals Mining | Mount Gibson vs. Rand Mining | Mount Gibson vs. Dexus Convenience Retail |
| Australia vs. Mount Gibson Iron | Australia vs. Perseus Mining | Australia vs. Stelar Metals | Australia vs. MetalsGrove Mining |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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